Moving Beyond: The Risks of Conventional Benchmarking in Strategic Thinking
Conventional benchmarking has long been a cornerstone of strategic planning - a method for comparing performance metrics against industry peers or competitors to identify areas for improvement. Yet, in today's dynamic business landscape, the traditional approach to benchmarking may pose significant risks, particularly when it comes to strategic thinking and innovation.
In this piece, we'll explore how the reliance on external benchmarks, particularly competitors or larger established organisations, can be risky and counterproductive for smaller businesses.
The Pitfalls of Competitor-Centric Benchmarking
Conventional benchmarking often revolves around comparing key performance indicators (KPIs) against competitors or industry peers. While this can provide valuable insights into relative performance, it also carries inherent risks. Smaller businesses, in particular, may fall into the trap of blindly attempting to emulate their competitors or larger counterparts, rather than charting their own path to success. By fixating on external benchmarks, they risk stifling innovation and missing out on opportunities for differentiation and growth. When it comes to the SME, we emphasised the significance of such businesses in an earlier blog. See our piece entitled, “The Power of Small and Unsung Heroes”.
Rethinking Benchmarking
To mitigate the risks associated with competitor-centric benchmarking, organisations must adopt a more nuanced approach - one that goes beyond mere comparison and embraces a culture of greater internal strategic thinking and innovation. This involves:
Internal Reflection: Instead of solely looking outward at your competitors, smaller businesses should look inward and reflect on their unique strengths, values, and aspirations. By understanding what sets them apart, they can develop strategies that leverage their distinctive capabilities and drive sustainable growth.
Aspirational Inspiration: In addition to studying competitors, organisations should seek inspiration from non-traditional sources—innovators, disruptors, and visionaries across industries. By studying how these trailblazers approach challenges and seize opportunities, organisations can uncover new ideas and strategies that have the potential to revolutionise their own industries.
Risk Awareness: Organisations must be aware of the risks associated with blindly following industry norms or competitor strategies. By critically evaluating external benchmarks and considering the unique context of their own business, leaders can make more informed decisions and avoid the pitfalls of imitation.
Strategic Agility: Finally, organisations must cultivate strategic agility—the ability to adapt quickly to changing market conditions and seize opportunities as they arise. By maintaining a flexible mindset and embracing experimentation and iteration, organisations can stay ahead of the curve and drive innovation in their industry.
Conclusion: In the pursuit of strategic excellence, conventional benchmarking against competitors or larger organisations has its place, for sure. However, this may pose significant risks for smaller businesses. By simply and blindly attempting to emulate external benchmarks, organisations risk stifling innovation, missing out on opportunities for differentiation, potentially deviating from their mission and vision, and ultimately falling behind in a rapidly evolving market.
To mitigate these risks, smaller organisations must adopt a more nuanced approach to benchmarking that embraces internal reflection, aspirational inspiration, risk awareness, and strategic agility. By doing so, such smaller businesses can chart their own path to success, drive innovation, and shape the future of their industries.
Think Point! What is the way? Is it to simply go into “auto-pilot mode” when it comes to determining your organisation’s position in the market and thus relinquish control? Remember what your own vision, mission, and identity is as this can easily become lost.
The Think Peregrine Team
